Q3 2021 Pharming Group NV Earnings Call
Yes. Thank you. So if we're looking at our business today, we see a well funded business supported by commercial sales and a growing pipeline for the treatment of rare diseases, and unmet medical needs and our lead product <unk> or <unk>.
Recombinant human <unk> inhibitor is launching over more than 40 countries with the sale of one or more than $146 million in the first nine months of 2021 and very importantly, we have a potential near an inflection point to significant inflection point with the anticipated end of 2022 launch of lineage.
Ownership in licensed from Novartis for the treatment of orphan disease, eight Pds excavated forcefully notices type three kinase Delta syndrome, we will now call it <unk> going forward.
We're also targeting new launch indications two C, one inhibitor, which face to EBITDA and phase II studies, and we have an early stage pipeline assets, including our recently in licensed potentially curative gene therapy treatment for hereditary angioedema and our own transgenic platform candidate for Pompe disease Alpha glucose of days.
Our protein replacement therapy.
And we're able to leverage our established commercial infrastructure across U S and Europe now for in licensed products and expanding our manufacturing capacity to support continued <unk> and the <unk> pipeline supplies.
Last week, because we have an experienced leadership team a new board of directors.
And a strong balance sheet to support ambitious growth strategy, including potential potential M&A and our growth strategy is on the next slide here. It spill out three pillars you see on the left hand side. The first one is to grow and extend our HIV franchise and therefore, we are fully commercializing <unk> in all major markets and expanding.
The geography still and of course, we have delivered on this by the recent in licensing of that early stage asset OTR 105 that ex vivo hematopoietic stem cell gene therapy for heritage Angioedema Com Orchard therapeutics.
And then in the Middle of course, you'll see the extension of the <unk> franchise to larger indications and develop new enzyme replacement therapies by means of our own platform.
We are engaged in C. One inhibitor for additional large indications at launch additional unmet needs and Dr. <unk> will speak about later and we are leveraging our transgenic manufacturing platform to develop new next generation protein replacement therapies and then on the right hand side. Our recent addition of only last couple of years, we are of course able to go.
Usually into expanded looking to expand our portfolio and leverage our commercial infrastructure to grow our business in everywhere already successful <unk> two years ago. When we move successfully in licensing of late stage assets, where the ownership for the treatment of Aps that product that we are aiming to bring to the market by the end of next year.
We will have a more in depth information from that also from from the Doctor and their umbrella.
And then of course, and we've said this we are very active at the moment.
In license or acquire additional late stage assets in rare and ultra rare diseases. We have a very active business development group because we can obviously through our commercial took our commercialization infrastructure levered leveraged at more by adding additional assets that can be launched within periods between now and three years from now.
Okay, Let me see what the strategy and action was delivering during the first nine months or the next slide.
<unk>.
Commitment to HPE was of course, we were successful in licensing <unk> hundred five.
Then we expanded the reach of <unk> with commercialization agreements with Newbridge Pharmaceuticals in North Africa, Middle East and we got reimbursement in Spain and in bringing <unk> also went on to Spanish market now.
And with regards to the expanding indications we were successful in restarting the acute kidney injury trial for.
For our <unk> inhibitor.
And following COVID-19.
And recently, we publish topline results from the <unk>, a <unk> inhibitor clinical trial of <unk> in pneumonia as a result of COVID-19 infection.
And then on the right hand side.
We successfully of Novartis actually because novartis is still doing this trial completed enrollment in the phase two three a registration enabling study with linear ownership for activate <unk> kinase Delta syndrome and.
We start to invest.
Seriously into prelaunch activities for the anticipated fourth quarter 'twenty, two regulatory approval of <unk>. So it was a busy nine months.
We look forward to of course, the following periods next slide please.
Now this of course shows you the Asia markets. This of course is our bread and butter and drives of course, the ability to deliver on all of these growth opportunities and to make all these investments that <unk> position stable position any heritor you on demand treatment market.
Heritor Angioedema as you know is caused by deficiency of C. One inhibitor, resulting in dose unpredictable attacks severe swelling in various parts of the bodies and.
Patients now, especially you here, we're talking about the U S market.
Are using medication for treatment and prevention ultra of these attacks rudeness is approved only for the treatment of acute attacks.
In adults and adolescence.
In 2020.
It was about $2 billion total sales in the territory angioedema market and the good news for the patients is that the increasing use of prophylaxis is taking place because of the fact that new treatments for prophylaxis offer better effect reduction rates than the previous IV plasma derived C. One inhibitor prophylaxis treatments.
And although these new compounds that are mainly based on the bookings that <unk> inhibitors.
The bakery in EBITDA.
<unk> block the main profit for symptomatology.
<unk> inhibitor.
Levels remained remained very low and therefore, it means that approximately half of these patients. Despite it being much better than previously still have breakthrough attacks, so frequently and some regulatory.
Are in need of breakthrough medications and that is where <unk> apart from the fact that <unk> on the right hand side here has a core segment of severely affected patients.
We are unable to get the proper results with other therapies.
That is basically still represents our core of our business route can ask now also clients itself.
To be treating more patients that have suffered for breakthrough attacks under the new prophylactic treatments, that's only support that only suppressed about it getting color, creating access. So therefore, we are optimistic and we remain optimistic and you have seen it in the results of this year that we have a gradual recovery from the impact of Covid nine.
<unk>.
We remain optimistic about continued growth of reconnect inheritor angioedema market. We also remain optimistic because of this picture here. What you see it is indeed that of course, a breathy entry of new better prophylactic therapies the shift in the U S market.
As predicted was moving to ask prophylaxis, we see that trend now as being sort of saturated and therefore, those who predicted that there is no place for for our Q2 therapies anymore with prophylaxis are actually proven to be not quite right. Because as you can see and as I was saying to earlier.
Every.
There needs to be.
Q treatments available even when you use prophylaxis, because prophylactic therapies have breakthrough attacks and it can be very unpredictable. So good clinical practice.
Actually says that patient needs to have always at hand, the acute therapies as well and then there's the opportunity for <unk>.
Certainly because the paradigm has changed from C. One inhibitor prophylaxis to watch bradykinin <unk> suppression. That's why <unk> has an opportunity now here for even the supporting further growth for <unk>.
Let me look at what the next key near term value inflection points will be as we build our sustainable business you see here.
That we are looking of course to deliver the pivotal study results.
From the study done by Novartis.
<unk> ownership in the beginning of next year, we anticipate also in each one.
File the regulatory filings for linear ownership and we do it ourselves to the FDA and EMA.
Then we.
Expect to initiate pediatric studies for any early ship.
In the second half of next year, and we anticipate the irregular.
Our regulatory approval hopefully for Lady ownership towards the end of next year and on top of that you see here that we anticipate the complete went off the enrollment in the anchor study in the second half next year and the initiation of a Japanese clinical trial for <unk> chips as well in the second half next year, because we have the.
Objective two also spread out to Japan with many ownership into the future.
And that brings me to the last slide of the introduction is an overview of our pipeline here. When you clearly see that we have of course, who connects in the market quickly followed by <unk>, which again, we hope to be able to bring into the market by the end of 2022, and we would have said I would like to hand over now to my colleague Dr. <unk> to take you.
Two of medical and clinical update.
And Rick over to you. Please.
Thank you Simon.
I'd like to begin by talking about our regulatory angioedema and R&D collaboration with Orchard Therapeutics with our product <unk> 105, and what this collaboration the goal is to develop and commercialize.
Ex vivo autologous stem cell therapy product gene therapy product for regulatory agile demos.
The product will in one or more functional copies of the surface <unk> one gene into patients.
This will use their own.
<unk> stem cells and this is done ex vivo, which are then transported back into the patient and the goal is to be able to providing.
<unk> durable C. One expression.
Expression.
In preclinical studies to date, we have seen that <unk> demonstrates high expression levels.
So you got inhibitor protein using lentivirus mediated transduction in multiple cell lines, including stem cells and we've also been able to see that the C. One inhibitor. That's produced is functional and a clinically validated assay.
Together with Orchard Therapeutics, we're able to leverage each of our expertise.
With <unk>, we have a partner that has expertise in gene therapy and developing these vectors.
We have an established network to manufacture.
The product.
Okay.
Many animal studies, and we have discovery capabilities and on our side, we have significant clinical and commercial expertise in HIV of course, we have.
To assist with the preclinical disease models for <unk> and we have as you've heard from some capital to fund ongoing development and future commercialization.
Theres combined expertise.
Paul is to bring a best in class Haa gene therapy to provide a potential cure for these patients with a single administration of <unk>.
105.
The way. This works is that it begins with harvesting cells from the patient.
Stem cells are then purified.
And then outside the body again ex vivo.
Working toppy of the Chinas inserted using a viral vector.
With patient and think conditions, where space is made in their bone marrow to receive the treatment.
And then essentially the gene corrected cells are infused back into the patient where the where the goal is to be able to express high levels of C. One inhibitor.
This type of approach using HSC.
Gene therapy has advantages.
Or other potential approaches.
The first point is that improvement there are multiple products approved.
Using this approach.
The other approaches.
Do not yet have products approved and this includes AAV mediated gene therapy as well as gene editing approaches.
Secondly, there is proven efficacy based on other clinical programs and we've seen an animal data with <unk> hundred five that we can achieve significant expression levels.
This has proven to be an issue.
Using AAV gene therapy, especially when we think about sustainability of effect.
The same goes for gene editing, where preclinical data appears promising but.
In a clinical setting this remains to be seen.
And thirdly on the durability of effect, we have seen with other programs from orchard as well as others.
I think the HSC gene therapy approach can provide sustainable levels over many years.
Data that had been published in the hemophilia a using AAV mediated gene therapy suggests that this can be a challenge.
And on the gene editing side this should actually be possible, although clinical data are not available.
And then lastly on safety you can.
Autologous cells, which the patient does not recognize this foreign appears to be safe and again.
Which has been approved in other disease states.
With AAV gene therapy, there have been significant questions that have been raised especially recently.
May be related.
<unk> responses to.
AAV.
Protector.
And then with gene editing, it's promising but no conclusion still can be drawn and I think with the approaching HLA E. One of the potential concerns is that this is causing permanent California inhibition without an on off switch if you will.
So we're quite excited about the possibility of using HSC gene therapy in HIV and Youll be hearing more about this program in the coming.
Quarters.
Yeah.
I'll turn now to talk about <unk>, and <unk> and leveraging our commercial infrastructure our expertise in immunology to grow our business further.
Let's start by talking about Atvs, So Aps activated <unk> Delta syndrome.
There is estimated to be <unk>.
More than 1350 patients across the U S EU and Japan that have EPS. This is based on an estimated prevalence of one five per million.
Those are estimates of course, but during just the past few months through our own efforts, we have identified more than 350 patients in these areas.
That half Atvs and ask there has been a growing understanding of primary immune deficiency, among which <unk> is one there is the potential to find even larger patient populations.
But EPS is a serious disease and like many rare diseases. These patients spend a long time undiagnosed or misdiagnosed they see numerous specialists.
To begin in childhood, but again theres a significant delay in diagnosis disrupts their quality of life school and of course social development.
They haven't oftentimes have had multiple biopsies.
Numerous specialists or actually even after the diagnosis numerous specials specialists are required to manage these patients and because of the burden of the disease. These patients have.
Significant depression, as well as fatigue that impact to their quality of life.
You see on the bottom of the type of manifestations that <unk> had.
Because its primary immune deficiency it causes severe infections, including a problem eventually called.
Bronchiectasis due to the severe infections.
It can also cause issues related to the Gi tract and.
Cost problems with absorption and autoimmune phenomenon.
But the heart of it is is that it causes swollen lymph node because there is this unchecked lymphoproliferative that occurs in there.
It can be manifested by large lymph nodes and then large screen as well as liver.
And although it is the primary immune deficiency and also have this other side of it where it causes autoimmune complications including severe anemia.
And then lastly, because these.
Blood cells have imbalance handling in this critical pathway of development.
<unk>.
These patients often develop lymphoma.
On the top right, we see the treatment options, which really are supported a nonspecific therapies. So using antibiotics when they get infections trying to use steroids to try to control the disease.
Many of these patients are also on.
Immune globulin replacement therapy.
Our off label uses of other types of immunosuppressive drugs to control the.
Lymphadenopathy are swollen lymph nodes that these patients will and in severe cases. These patients go on to stem cell transplantation, but the bottom line is that there is no approved therapy for these treatments for these patients and despite the availability of these current treatment options. The disease is really poorly managed.
We have something that is in development now for the treatment of Atvs and as you've heard from Simon our goal is to have it put do per day by the end of next year.
And you also is it an oral selective <unk> delta inhibitor. The biomarker data shows that it has.
Direct impact on the root cause, namely <unk> K delta over activation and.
And by doing so it has the potential to mitigate the progression of the disease and treat and reduce treatment burden.
We'll talk a little bit more about this.
On the next slide but the diagnosis is made by a commercially available genetic tests and we've heard from us.
Earlier this year that we've launched a program to make that more widely available.
On the regulatory side, we do have orphan drug designation, both in the U S as well as in Europe.
And again, the nice thing about this program.
Fits on top of our existing core expertise in immunology with.
Hey.
We've talked a little bit about what <unk> is already on the right.
Caused by.
Mutations in one or two chains, leading to these two different forms of Atvs, which really have very similar clinical manifestations.
And the bottom line here is that there is over activation of this.
Pathway, which causes.
Dysfunction, and Dysregulation of the immune system and of course balance signaling is needed for immune normal immune function.
On trying to find patients, we're doing quite a bit of work.
And as I mentioned earlier just through our initial efforts we found several hundred patients both in the U S as well as in Europe.
On top of that or using any analytical based approach using artificial intelligence to look at patients who have the clinical manifestations of atvs, but may not have yet been diagnosed and doing this we can get out there in the field and promote and let doctors and SM.
Patients know that we have a.
Jeanette.
Kinetics testing program, that's sponsored by farming that we put out there together with <unk>.
Help diagnose these patients were promoting this both in the community.
Immunologist and Hematologist, who see these patients, but also with a variety of organizations that are active in the primary immune deficiency feels including including the immune deficiency Foundation global genes and the Jefferies Motel Foundation.
Next I want to talk to you a little bit about the pivotal trial, that's wrapping up as we speak.
The study had two parts part one was a dose finding part and in this.
Part of the study three doses were evaluated in a dose escalation for them.
This was looking at patients with Aps with this mutation and typical Aps manifestations symptoms.
Outcomes of course, where safety and Tolerability looking at pharmacokinetics and looking at the degree at which we could block.
Hyperactive pathway.
Based on that work the dose of 70 milligrams twice daily selective and these results have been published.
Which is the second referenced on the bottom of this.
Slide here.
And this dose of 70 milligrams twice daily was selected for the double blind placebo controlled part of the study.
In this part of the study patients were randomized two to one to receive millennial SIB or placebo for 12 weeks.
The primary endpoints were the degree of lymph node swelling or lymphadenopathy and the immuno phenotype normalization. So looking at specifically at the T cells to see which which proportion of cells. We can return to a functional status. So that they can fight infection in these patients.
After the randomized controlled phase of the study the patients were allowed to enroll into an extension phase which is still ongoing.
As Simon mentioned earlier week Novartis has completed enrollment in this study and we expect results to nail billable.
Early next year.
And with that I will hand, it over to your room to review the financials.
Yes, thank you very much.
Alright.
Okay.
The financial highlights for the first nine months of 2021, and Theres a subside so called building a sustainable business and Thats obviously, we.
Flexing.
The efforts, we are taking on having <unk> as the cash generator at the moment, but also building more and more for the future. So that is Daniela ship for the let's say medium term and OTR 105 will be longer term next to our other in house product development efforts. So we are creating a more balanced portfolio.
For the for the future and that's also what you will see when I go through the numbers amongst others in the.
The operational costs.
Q3 showed a 6% increase in sales from Q2.
This year.
And looking for the year to date numbers, we have a 4% decrease so what we basically see in the shales is an ongoing recovery quarter on quarter in sales following the impact from COVID-19, especially in Q1 on the U S healthcare economy and that was pretty.
As we noted in our earlier financial reports as well.
Then if I look at the sales and especially the regional split.
The recovery in the U S. We'll show up with an increase of 6% and the drivers being.
Basically new patient enrollment every quarter, we increased the number of new patients being enrolled.
Also ongoing.
Product demands.
The prophylactic products. So Simon also talks about.
Which seems the growth seems to be stabilized again.
<unk> products.
For the first nine months in the U S. We had.
A decrease of 3%.
In Q3, and the rest of the world.
Europe net sales were $1 9 million, which is a big increase compared to Q2, but that is mainly because of phasing.
And which we have seen quarter on quarter in Europe, and the rest of the world, but also we entered a new a new country in Q3, where we sold product in the first the first for the first time.
The nine months sales of Europe, and the rest of the world were $5 million.
Against last year's $6 1 million in Q3 2020 are.
We're going to profitability gross profit increased by by 4%.
In line with increased quarter over quarter revenues and also for Q3 year to date, you see a development in line with our sales development of a 3% decrease in comparison to the first nine months of last year.
And Theres also means that we have a stable gross margin of around 18 million Sims.
Moving on towards the operating profit and the operating costs. The operating profit was $15. Three Q3 year to date and that is a decrease of 72% on last year, so that needs a bit of an explanation be.
It was mainly because of the increased operating costs.
And that includes significant investments in the pipeline.
<unk> 105.
The investment in collaboration was already mentioned.
We paid in total $17 $7 million four at $13. One has gone through the year through the P&L in Q3, and another $4. Six you will see later in the investments because we bought shares of this company as part of this overall transaction. So again $17 seven in total $13.
One going through Opex and $4 $6 million in shares.
And also we had increased cost of corporate developments so.
Operating cost increased.
From a two story $116 million compared to $78 million.
Last year increased R&D expenditure I will show you showed that show you. The numbers later because of the <unk> 105 license linear ownership prelaunch marketing preparations, but also manufacturing costs for linear ownership. So we have the first manufactured products.
An increase in employee numbers to support the future growth of the business and share based compensation and in addition, also mentioned before we had an increase in our liability assurance, but also in compliance and control costs and that is related to the recent NASDAQ listing and that was also previously noted.
And the net profit for the first three quarters of the year was $13 9 million and that is a 49% decrease from last year.
And again, it's a result of initial in licensing cost from <unk> five leading to the lower operating profits and that is offset by currency exchange rate results and lower funding costs and that's what you see on the next slides.
Birds eye view on what happens with profit before tax last year of $38, one and 21 three this year Q3 year to date. So the underlying business gross profit went down by $3 seven so thats, both gross profit and other income.
<unk> mentioned, the OTR 105 investments $13 1 million COO.
Increase in research and development expenditures and that more than half of it is from linear ownership.
So.
That's an important part of the R&D expenditure.
So an increased SG&A costs, we see linear ownership for example, the patient finding cost that underwrite just just mentioned is an increasing cost. So you see that across the board.
We are increasing our investments in the launch of.
And manufacturing.
Any other ships.
Also part of this SG&A increase as the liability insurance increase.
The dark blue.
Affects up positive and they are in the net financing cost if you go through to the P&L.
Foreign exchange effects on the cash that we have.
Last year, we had a negative effect of the $10 million. This year, we have a positive effect of $10 million. Hence the comparison is it $20 million positive.
Last year, we have the supplement expenses from the <unk> loan you still hold that loan $4 3 million and that is a few other things as well so again.
To explain these drop in in the profit before taxes.
Wanted to understand.
The.
The aim of what.
We're building the business, including the investment in OTR, 105, and including investments in launch of linear ownership.
Yes.
Moving to the cash flow.
At the beginning of the year, we had 205 cash and cash equivalents on the balance sheet at the end of Q3 was 193.
And that was driven by operating cash flow increase of $28 2 million very much in line with the profit before tax.
Changes in working capital cash outflow of $6 million, mainly because we.
We think more payables so we.
We used the cash without investing activities, it's a mix.
$15 million that went out investment into production facilities for for Refinished investments in ERP system that we are going to bring live next year.
<unk> five has a set $4 6 million of shares that we invested in and also included here is license cost for four linear ownership.
The financing activities totaled 27, 7%.
Chunk of $25 million important to note that is the milestone payment the final milestone payment that we pay to bausch.
And that is related to the acquisition re acquisition of the commercial rights of <unk>. So that those cash outflows are over.
So overall a reduction in cash of almost $22 million.
But keep in mind $25 million of that is because of the bausch one off payments $17 seven and total was related to the <unk> 105 payments. So that's in total almost $43 million of one off payments that are supporting future growth of the business.
Yeah.
Yes, we can go to the next next slide because there is basically a repetition.
So the financial outlook for the remainder of 2021.
We continue to expect quarter on quarter increase in revenues from <unk> sales.
Due to normalizing of the pharmaceutical markets following the impact of COVID-19, especially in Q1 in the U S. However, with Covid developments, we will continue to monitor the situation in all markets.
Yes, given the developments, we expect some periodic disruptions again.
We continue to expect maintenance of positive net earnings during the remainder of the year, we keep on investing in launch critical medical affairs and pre marketing activities for <unk>.
As well as continued investments in ongoing clinical trials for <unk>.
Other indications are the current indications for <unk> and other development activities, including <unk> 105.
And.
We are constantly looking assignment said acquisitions and in licensing of new development opportunities.
And that's the.
All the financial guidance for 2021 that we will at this stage and gifts.
With that that's the end of the presentation part of this.
This call and I'd like to hand over to Simon for the to lead the Q&A.
And before I do that Thanksgiving and before I do that.
I'd like to summarize that.
<unk> seen a well funded business supported by commercial sales and a growing pipeline for the treatment of these rare and ultra rare diseases and unmet medical needs the lead product from our Paas from <unk> as you've seen.
Stable.
Growing picking up growth again, and we are optimistic towards the future growth continues and we are ready to be realized $146 million in the first nine months.
Point out again that we have a significant potential near inflection points with your dispatch launch of AOS ship towards the end of next year that we in license from Novartis in the yogurt interact talk about it.
Our patient finding efforts that just started and already have for you have more than 350 Aps patients that were identified and we continue in fact, we will increase the <unk>.
Activity this.
Next year for this of course.
We're targeting a new large indications for C. One inhibitor, we have early stage buybacks and again, you've heard enernoc explain.
Licensing of OTR 105.
And of course.
We are able to leverage further or.
Our commercialization infrastructure in the U S and Europe for in license products and expanding manufacturing capacity and we're on the hunt for additional late stage assets to add to our portfolio.
Further leverage the commercialization infrastructure of the company.
With products that can be launched between now and three years time and hospital based experienced leadership team and strong balance sheet that continues.
And cash support our ambitious growth strategy, including the access those potential M&A transactions.
I would like to hand over back to the operator now to open the floor for any questions that you may have and.
Also have here.
<unk>, our chief commercial Officer, Stephen Tour to answer any questions that you may have on our commercialization so.
So operator, please open the floor for questions. Thank you.
Thank you. So if you would like to ask a question. Please press star followed by one on your telephone keypad or Alternatively, if youre doing a SKU at peace click the request to speak if.
Have you changed your mind. Please press star followed by two winter open to ask your question to just show you.
We have one question from half to Chin from Oppenheimer <unk> co. Please go ahead.
Great planning and keeping herein.
Hey.
Hey, we can hear you yes.
Great. Thank you I just got a couple of questions and then one housekeeping question after that.
So.
On the <unk> zero five can you just kind of walk us through where you are aware alternatives in terms of just the manufacturing.
Of that product are you in that sort of clinical stage.
When we get to commercial stage manufacturing.
And then what are some of the investments that will be needed around that for linear with the I just have a question in terms of.
If you recruit that close to 40 patients that it seems on controls dot gov that youre going to recruit.
Going to have more than 10% of the patient population you identified in the United States, but.
How certain are you that that one trial is going to be enough on that.
What is your level of conviction certainty that the regulators are going to be comfortable one trial in this indication.
Again, like I said, you've got a big patient population there.
As a percentage of the total in terms of approval next year hopefully assuming the trial is positive and then I'll just follow up with a quick housekeeping matter question on online.
Yeah, I don't know.
This please.
Sure Thanks, and thanks for the questions.
On OTR 105, and the collaboration with Orchard. This is still.
The work that's going on right now is still in the preclinical stage. So the manufacturing is really centered around that.
Over the course of.
The coming quarter.
Quarters, we'll be able to provide you a little more information on how thats progressing and the investments that we'll be making there.
Now take a question on when Youll have a soup.
The pivotal study is 30 patients.
And then this is a randomized double blind placebo controlled study. This was designed really with feedback from.
The regulators and as Youre, probably aware this is a typical design that's required.
In a single study that's required in this type of rare and ultra rare diseases. So we're fairly confident that.
I think not only is this study hit the endpoints, but really looking at the totality of the Teva. So we see the endpoints that I mentioned on the immuno phenotype, but also on the long patent apathy as well as other measures that are likely to be observed secondary endpoints.
Really the overall picture that we observed from the study.
We'll be supportive and potential for.
Regulatory approval, both here as well.
In Europe.
And you said you're going to follow up question Rod.
Yes, Thank you and just a follow up question was.
As you build up the manufacturing for like I looked at it.
I assume you are youre going to sort of expense that through the R&D line.
Then it becomes inventory assuming approval next year.
We have certifications on your on your cost of goods sold me on gross margin.
When you look at it is is going to get approved next year and again. Thank you for all the questions.
Yes.
<unk>.
The products that will be commercially use will indeed, just go to inventory next year.
First we'll go shop for development purposes will go through the through the P&L. That's the way we will treat it.
Going forward.
Great. Thank you for all the questions.
Thank you Hi, Josh.
You have another question from Joe <unk> from H C. Wainwright. Please go ahead.
Hey, guys. Thanks for taking hi, Justin Hi, guys.
Just a couple of logistical questions I guess first Simon do you think you can give us any more color on the additional indications you might be looking at obviously, we've talked about things like preeclampsia in the past.
With regard to the Hai.
Study as well as combining with the other studies are you seeing any impact yet with regard to.
Opening up sites or current sites about how it might be loosening up due to upfront COVID-19 restrictions and then lastly.
On your regulatory efforts for roofing nest.
How should we sort of define your efforts to get it approved in additional countries.
Yes, Okay first with regards to clinical trial progress.
In general.
We see still of course that clinker.
Clinical trials are not on top of the priority list of many centers.
It means that we are.
Working on expanding the number of sites that participate in for instance, the Hai study.
To expedite the recruitment of that study you've seen the sort of forward looking statements. We are making on when we expect that to state that.
That's fair to be fully enrolled.
But again as you rightfully pointed out COVID-19 is not over yet in fact, it's coming back.
In a lot of areas in the hospitals.
And.
As many of our other colleagues in the industry we're not.
No we are not yet out of the woodwork at all with regards to the normal speed is critical to develop clinical development Thats. One thing would you like to add something to that <unk> or is that sort of reasonably summarized.
Yes, that's a reasonable summary, I think Joe there's still a lot of COVID-19 related.
So out there a lot of these centers were involved in Covid studies and it's just.
They're still trying to climb out of all of that math. So I think things are improving and we are going in the right direction, but it's still it's been our flows sputtering start come.
Coming out of Covid.
And with regards to because I'm sure we haven't started at all.
Coming out of Covid at all.
I think that was your question right Joe.
Correct.
Yeah.
Then with regards to getting <unk> approved in more territories.
Yeah, we're thinking a selective look at this obviously.
But you've seen that we recently got reimbursement sorted out in Spain. We're also obviously looking for another country that is typically that's one of the big five Europeans as Italy.
Looking towards getting reimbursement area as well obviously the product was approved long time ago, but reimbursement is a different game in these kind of territories and you saw of course, the collaboration with Newbridge.
Spend as well into these north African and middle Eastern territories. So step by step we're taking it to a third of forward as you know <unk> is hampered by the fact that.
In the rest of the world outside of the U S or everything is referenced to European prices, which are.
A couple of 219 <unk> blocks.
Prices and therefore <unk> none of the companies involved.
Is commercially very interesting.
A very interesting indication in this respect.
So therefore, it's difficult but on the other hand, our strategy is to get a bigger geographical footprint, obviously because.
Rolling out lending only so it will be a very different story in this respect and therefore, we will continue to add additional territories for <unk> and of course, I mean, obviously it comes on in.
It may actually drag CRO to connect with us into new markets, where IV might.
It might enter.
To answer your question Joe.
Certainly does thanks for all the added color.
Okay. Good.
Any more questions Joe.
Thanks.
We have another question from Simon scores from first then please go ahead Simon.
Yes, thanks for taking my questions I've got two or three.
I mean first of all I was wondering if you could give us a timing.
The submission of the NDA application in comp.
Secondly, I was wondering I'm going to stay with that some a number of gene therapy based approaches.
Now in trials on pump and I was just wondering if you could comment on how you're running approach stacks up against those.
And thirdly, just on the marketing costs.
Year on year, you had a $7 7 million increase.
I was just wondering if you could split out how much of that increase.
Relates to Lenny ownership and other items and how much relates to reconnect.
Yeah, Thanks, Tom Ciulla.
First one first and assignment of our pump homeless disease, we said taken of course our products.
Element is hampered.
Inefficiently at this point in time by unavailability of materials necessary for manufacturing that is a problem that we have in the pharmaceutical supply chain widely.
And we are no exception tronox. Unfortunately.
Secondly.
I'll give you a appropriate date for the R&D with regards to the continued medical unmet medical need we've just done a deep dive into this indication and we concluded that the.
Unmet medical needs.
There is still there and we expect it also to continue to be that also because.
Gene therapy might have.
Some additional hurdles.
Such a lysosomal storage diseases pompe compared to many of the other diseases. So the answer is we continue to be interested in pumping.
Significantly delayed because of the COVID-19 issues with manufacturing and.
We have no data at the moment for an indie therefore as these supply chain disruptions are widely spread in Covid has not.
Going back.
Keeping in fact, so it's difficult to say at the moment.
That's my first question second one.
The second one you don't because you Oh, yes that was on the marketing cost.
The increase of $7 $7 million, how much of that is there any other shifts.
<unk> expenses for linear ownership was.
The $2 million out of the increase of seven seven.
The rest is is I would call it.
Kind of infrastructure costs, so our highest spend in general in Europe, and the rest of the world some of that is <unk>.
<unk>, but we are building our commercial infrastructure.
In Europe, and the rest of the world and that is not only for <unk>. That's also looking forward to two.
Gilenya ownership. So so part of that is <unk>.
Part of it is as many of US it's difficult to say now what exactly just finish but the out of pocket expenses increases fellaini ownership was $2 million. This is clearly a strategic investment drive up so we want to launch their new ownership.
Farmer draw faster than reduce <unk> and of course the opportunity for <unk>.
It's significantly bigger.
Very significantly bigger in Europe and of course this for for connection.
Okay and is the $2 2 million when you thing when you're talking about a $2 2 million you're talking there about the patient finding costs mainly.
Yes, yes, that's a big part of it yes.
Okay. Thanks, very much that's very helpful.
And you had more some more question Simon.
No that's it okay.
Okay. Thanks.
So any further questions. Please press star followed by one on your telephone keypad Kenneth Lee. Please use the question icon.
It appears we have no further questions at this time.
Okay. Thank you maybe some closing remarks.
Hello, ladies and gentlemen.
Well, thank you very much.
Thank you very much Florida attending our conference.
And.
We clearly look forward to as I said in my in my quote to the next.
Milestones, we look forward to seeing the results of the <unk> trial.
Results at the beginning of next year, because we believe that this product, especially.
It is important for the execution of our strategy.
Because we think it's a transformational already transformational potential product for Aps patients lives, but is also a transformational commercial potential for our company and Thats why were looking very much forward to that so thank you for attending here and we look forward to seeing you again at our next conference with on X results sometime in March. Thank you Goodbye.
Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
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